If Donald Trump uses Brussels' Bazooka for the first time, the EU plans to take retaliatory measures to attack Silicon Valley in order to impose tariffs.
Two officials know that the European Commission is seeking to use what it calls "anti-stubborn tools" to potential disputes with Washington.
An official said “all choices are on the table” and noted that the ACI was the toughest response without violating international law.
The tool was developed during Trump’s first term and subsequently used as a deterrent to China, and could impose restrictions on trade in services if the EU’s executive determines that a country is using tariffs on goods to force policy changes. .
Officials said Trump threatened to use tariffs to force Denmark to hand over Greenland and urged the EU to approve law enforcement actions by U.S. technology companies.
The ACI, when it came into effect in 2023, was called "bazooka" by some EU officials, allowing the group to choose from a wide range of retaliatory measures, such as revoking protections of intellectual property or protections of commercial exploitation, such as software downloads and streaming services.
It also allows the EU to block foreign direct investment or restrict market access to banks, insurance and other financial services companies.
The second official warned that despite the EU’s skillful handling of commodity tariffs, it could still extend the dispute to new areas including services and intellectual property.
Trump said last week that he would impose tariffs on the EU “absolutely” on Brussels’ actions against U.S. technology companies and its huge trade deficit on goods. He did not provide detailed information on when these measures will be taken, or whether the group could negotiate a probation, as Canada and Mexico ensured.
EU Trade Minister met in Warsaw on Tuesday to discuss his threat. Officials briefed the closed-door discussion, and he said most expressed support for punitive action when necessary.
Trade Commissioner Maroššefčovič said he wanted to negotiate a way to avoid tariffs, but added: "If we get hit, we will respond firmly."
šefčovič noted that the group had a large deficit with the U.S. services, even if it was surplus in the commodity.
Some member states fight the trade war when economic growth is so weak. "We want to escalate gradually," said an EU diplomat.
Any retaliation must be proportional and the Commission must provide evidence of damage to the EU industry. It also must seek at least 15 of the 27 member states to ratify. The consultation can take weeks; the last retaliatory tariffs imposed on the United States in 2018 took three months.
By contrast, Canada and Mexico announced retaliatory measures within hours of Washington's decision to impose a tax rate of up to 25%.
Trump then suspended tariffs in both countries in ostensibly in exchange for a promise to suppress immigration and drug trafficking.
French Trade Minister Laurent Saint-Martin told the Financial Times that despite the ACI, the EU may need faster retaliation measures. "Speed is one of the key issues, we have to be faster than last time. We have to be more united and faster."
In March 2018, Trump imposed a 25% tariff on steel and 10% on aluminum. The EU spent three months approving its 2.8 billion euros of retaliation for U.S. goods.
EU diplomats said the group could develop rapidly in the crisis, adding: "Look at our reaction to the Russian invasion of Ukraine or the Kuvid pandemic."